Canada: Appropriation Of Personality

Last Updated: May 2 2012
Article by Peter E.J. Wells, C.S.

For some time courts have struggled to find a way to address cases where one person's personality has been used without permission by another for his own purposes. In the 1930s English case of Tolley v Fry & Sons Ltd a candy company had used a drawing of a well-known amateur golfer in an advertisement. The drawing was accompanied by verse comparing the excellence of Mr. Tolley's swing to the excellence of the defendant's candy. Because Mr. Tolley was an amateur, the implication that he endorsed the defendant's product was held to be defamatory (because the ad untruthfully suggested he was not an amateur, but was a professional). The courts all recognized that the solution was anomalous, for had Mr. Tolley been a professional golfer, or a banker the implication that he had endorsed the defendant's product for money would not have been defamatory.

In the early 1970's a well-know football player, Bobby Krouse, learned that his photograph was being used by Chrysler Canada in a promotion. At trial the court considered defamation, passing off, and finally concluded that it must be wrong for one person to use another's personality for commercial gain. However, because Mr. Krouse had been unable to show that the use of his picture by Chrysler had made any impact on his ability to secure endorsements, the court only awarded him $1,000 in damages. Chrysler appealed, and the Court of Appeal stated that while such a right to personality could be violated by commercial exploitation by another, the inability to prove actual damages was fatal to Mr. Krouse's case. Several years later a summer camp had an artist create a stylized sketch of a water-skier based on a then well-known photograph George Athans used to promote his shows. He sued, and the court concluded that it was wrong for the camp to have used his image for commercial purposes. The damages were assessed at $500, being the amount the plaintiff might reasonably have expected to receive for permission. While the damages amounted to 10% of the camp's gross receipts for the year, they were still hardly worth the effort.

In late March this year, the Alberta Court of Queen's Bench released its decision in Hay v Platinum Equities Inc. Mr. Hay, and his professional corporation engaged in practice as chartered accountants and Platinum was a commercial real estate syndication corporation. In 2005 it was considering the purchase of a commercial property, and it decided to borrow the funds from the Royal Bank of Canada. In addition to the usual financial statements, the bank also required Platinum to provide it with a review engagement report (RER) prepared by a chartered accountant. When it approached one firm of accountants Platinum was advised that it would take them between six weeks and two months to prepare the RERs. David Humeniuk, a Platinum employee, said he knew an accountant who could prepare the RERs much more quickly. He was tasked with getting them. Mr. Humeniuk had previously dealt with Mr. Hay on behalf of a company called Power Mortgage, and had retained RERs Mr. Hay had prepared for Power Mortgage. Very quickly Mr. Humeniuk provided Platinum with RERs apparently completed by Mr. Hay. In September 2005 Mr. Hay received a call from the Royal Bank asking about the Platinum RERs. Mr. Hay didn't recognize the name, and asked the bank to send him a copy. After examining the documents, he advised the bank that he hadn't prepared the RERs. Mr. Hay reported the incident to the Institute of Chartered Accountants of Alberta (ICAA), and his lawyers wrote a demand letter to Platinum. By the end of October 2005 he had sued for defamation and appropriation of personality. Platinum then wrote ICAA asking it to investigate. It not only defended, but also counterclaimed alleging that Mr. Hay and his professional corporation had conspired with Humeniuk and others to injure Platinum.

Mr. Humeniuk claimed that he did not know that the RERs had been forged, and that he had nothing to do with it (he blamed a woman who was not called as a witness). He didn't help his cause when it turned out that two cheques he produced to demonstrate that he had made payments to this woman turned out to have been altered to change the name of the payee when the versions he provided were compared to copies obtained from his bank.

The court concluded that nothing Platinum had done was defamatory, but did conclude that Platinum had appropriated his personality. Platinum had argued that submitting the RERs had not appropriated Mr. Hay's personality since his ability to exploit his personality had not been interfered with.

One issue the court addressed was that in the earlier reported cases on appropriation of personality, the plaintiff was famous or a well-known celebrity. The court concluded, however, that the wrong was the use of another person's personality without permission with a view to commercial gain, and that had occurred in this case. A professional's name and reputation is entitled to be protected from unauthorized commercial exploitation every bit as much as a celebrity's name and likeness.

The court found that Platinum was responsible for the wrongful conduct of its employee Mr. Humeniuk. Platinum had authorized him to obtain the documents on an urgent basis having been advised by the first accountants that they would take six weeks to two months to complete the task. The need to obtain the documents in a much shorter time frame had created or enhanced the risk that Mr. Humeniuk might cut corners to meet the deadline.

Damages were assessed at $18,000, which was the court's best estimate of what Mr. Hay would have charged to prepare RERs for Platinum. The court was not persuaded that the evidence supported the claim that Mr. Hay had lost business as a result of these events. The court found that there was no evidence of malice on the part of Platinum against Mr. Hay, and thus aggravated damages were not appropriate. The court also concluded that Platinum's conduct had not been so "malicious, oppressive or high-handed such as to warrant an award of punitive damages."

The court then went on to consider the scale of costs to be awarded to Mr. Hay and his professional corporation. Normally costs are awarded on a "party and party" basis, which does not fully compensate the successful plaintiff for the costs he has paid to his own lawyer. In this case the court awarded costs on a higher "solicitor-client" basis that would more fully compensate him, although not completely. While Platinum had dropped its counterclaim against Hay and his professional corporation prior to trial, its pleading still alleged that it had engaged them to prepare the RERs on its behalf and that they had in fact been prepared and signed by Mr. Hay. Despite the evidence that went in at trial that showed beyond any doubt that Mr. Hay had nothing to do with the preparation of the RERs, the allegation was never withdrawn and Platinum never apologized for having made it. The court found that in the face of this, Mr. Hay had really been left with no choice but to litigate the issue, and the cost ought to be borne by Platinum. While not discussed in the case, one must wonder why Platinum would make such an allegation if it hadn't received an invoice from Mr. Hay's professional corporation, or hadn't issued a cheque in payment.

While this case represents a further development of the appropriation of personality cause of action, the scale of damages continues to be quite modest. The compensation the plaintiff receives is based on the compensation the plaintiff would have received had he agreed to give the necessary permission (as in Athans) or performed the work. This fails to account for the fact that the plaintiff was never consulted and might never have given permission for any amount of money to that particular defendant. A remedy that merely requires that defendant pay what it would have paid had it sought and obtained permission can only encourage some parties to take the chance, in the hope that the plaintiff will not sue because the likely recovery isn't worth the cost. It may be that punitive damages should be used to remove this incentive to "take a chance".

This problem was identified by Justice La Forest in a different context in the 1989 Supreme Court of Canada decision Lac Minerals v International Corona Resources. There a junior mining company (Corona) had provided confidential information to a senior mining company (Lac) in the hope that Lac would agree to help it develop the property. Instead of working with Corona, Lac purchased the land itself and built the mine. According to Justice La Forest "If by breaching an obligation of confidence one party is able to acquire an asset entirely for itself, at a risk of only having to compensate the other for what the other would have received if a formal relationship between them were concluded, the former would be given a strong incentive to breach the obligation and acquire the asset. In the present case, it is true that had negotiations been concluded, Lac could also have acquired an interest in the Corona land, but that is only an expectation and not a certainty. Had Corona acquired the Williams property, as they would have but for Lac's breach, it seems probable that negotiations with Lac would have resulted in a concluded agreement. However, if Lac, during the negotiations, breached a duty of confidence owed to Corona, it seems certain that Corona would have broken off negotiations and Lac would be left with nothing. In such circumstances, many business people, weighing the risks, would breach the obligation and acquire the asset. This does nothing for the preservation of the institution of good faith bargaining or relationships of trust and confidence. The imposition of a remedy which restores an asset to the party who would have acquired it but for a breach of fiduciary duties or duties of confidence acts as a deterrent to the breach of duty and strengthens the social fabric those duties are imposed to protect. The elements of a claim in unjust enrichment having been made out, I have found no reason why the imposition of a restitutionary remedy should not be granted." The thrust of Justice La Forest's holding is that remedies ought not to be limited in such a way that unlawful conduct is effectively encouraged.

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2012 McMillan LLP

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Peter E.J. Wells, C.S.
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